House GOP shreds Kasich's priorities

Wednesday

Apr 10, 2013 at 12:01 AMApr 10, 2013 at 8:42 AM

Gov. John Kasich's major budget policy changes took a beating yesterday from legislative Republicans, who slashed his tax overhaul, eliminated his proposed Medicaid expansion and rewrote his school-funding plan. Instead of Kasich's plan to cut the state income tax by 20 percent over three years, plus an additional 50 percent tax deduction for business owners on up to $750,000 of net income, House Republicans replaced it with a 7 percent income-tax cut that is retroactive to Jan. 1.

Gov. John Kasich’s major budget policy changes took a beating yesterday from legislative Republicans, who slashed his tax overhaul, eliminated his proposed Medicaid expansion and rewrote his school-funding plan.

As part of their first round of budget changes, House Republicans rekindled fights from last session: They’ll take another swing at defunding Planned Parenthood and creating a program to help fund nonprofit entities that provide pregnant women with alternatives to abortion.

Instead of Kasich’s plan to cut the state income tax by 20 percent over three years, plus an additional 50 percent tax deduction for business owners on up to $750,000 of net income, House Republicans replaced it with a 7 percent income-tax cut that is retroactive to Jan. 1.

“We are going to continue a lot more work than you’re going to see (here),” Rep. Ron Amstutz, R-Wooster, chairman of the House Finance and Appropriations Committee, said of the tax cut, projected at $1.5 billion over the next two years.

Kasich’s overall tax package would have resulted in a $1.4 billion cut over three years. He looked to cover much of the lost income-tax revenue with a broad sales-tax expansion and a new tax on shale drilling that proved unpopular with a variety of business groups and GOP lawmakers, so they stripped them out.

“We appreciate the House’s income-tax cut, and we’re hopeful that there’s more to come so that we can keep this job-creation momentum going,” Kasich spokesman Rob Nichols said. “The governor will continue to pursue tax reform and a larger tax cut — especially a small-business tax cut — to help make Ohio more competitive.”

By eliminating Kasich’s proposed revenue-generating tax changes, House Republicans were forced to trim the tax cut and find new ways to fund it.

In addition, the House is switching to Legislative Service Commission estimates for tax revenue and Medicaid caseloads, which are more generous than Kasich administration figures, providing lawmakers about $360 million more to utilize.

House Republicans also performed a major overhaul to Kasich’s school-funding plan. The plan drew fire because 76 percent of poor, rural districts would have received no new money, while a number of suburban districts would have received significant increases.

Overall spending, Amstutz said, will remain similar to what the governor proposed. But under the House plan, the number of districts getting no additional money decreased from nearly 400 to 175, and the cap for maximum funding increases went from 25 percent to 6 percent.

House Republicans said no district would get less funding from 2013 levels under their plan. However, that is true only when hundreds of millions in state transportation money is not counted this year, but is included in the House GOP figures.

Central Ohio districts would receive combined cuts of more than $50 million, compared with Kasich’s plan, in each of the next two years. Olentangy schools would be slashed more than $14 million below Kasich’s proposal next year, and almost $19 million the following year.

“We think we have something pretty close to a workable, sustainable long-term solution here,” Amstutz said.

Nichols said, “our approaches have similarities, but there’s more work to do.”

Overall, two-year state spending would drop from $63.3 billion to $61.4 billion, but that reduction stems from the decision to forgo federal Medicaid expansion dollars.

House Republicans rejected Kasich’s push to expand Medicaid to cover 275,000 low-income Ohioans through the federal health-care law. The plan to increase eligibility to 138 percent of the federal poverty level would have been 100 percent federally funded for the first three years and 90 percent for several more years, and it would have brought in $13 billion in federal money over the next seven years.

Rep. Barbara Sears, R-Sylvania, said the proposed expansion was “forever tainted by ‘Obamacare,’ and I don’t know (how) you get around that.”

Later, she joined Democrats on the House Finance Committee to vote against replacing the governor’s proposed budget with the House plan, citing GOP leaders’ decision to remove the Medicaid expansion.

“I think once it comes out, it will be very difficult to get back,” Sears said.

Mike Abrams, president and chief executive officer of the Ohio Hospital Association, said lawmakers were “missing a once-in-a-generation opportunity to provide meaningful health-care coverage to Ohio’s most-vulnerable citizens.”

Rep. John Patrick Carney, D-Columbus, said he will introduce a stand-alone Medicaid expansion bill by the end of the week using Kasich’s proposed language. He said he will look for House Republicans to provide 11 votes to go along with those of the 39 Democrats.

“Instead of pragmatic elected officials, you have people making decisions based on political rhetoric and what’s going to hurt them in a primary,” Carney said. “These people are still going to come to the emergency room and need care. It’s the legislature’s responsibility to make sure (hospitals) can get compensated for that care.”

House Speaker William G. Batchelder estimated that he had about 20 members of his caucus who wanted to do something, 20 who were unsure and 20 who “might shoot themselves before they voted for it.”

Nichols said a failure to expand Medicaid would “hurt our economy” and the House’s proposal is “ not enough.”

“Ohio’s support for this needed change is diverse and broad and the governor will see this through to get it done.”